next generation service innovation workshop - singapore - 23 august 2013

www.growthchampions.org www.trainingvision.com.sg


Today’s workshop is designed to stretch thinking using specific insights as s9mulus to change views

Morning A=ernoon

S9mulate Priori9ze Challenge Focus and Next Steps

Clear Outputs Informed Inputs

External S9mulus

Reflect & Review


During the day we will cover four key areas and discuss a number of service innova9on models

1.   Context for Service Innova2on: §  History, leading examples and evolving framework of progress

2.   Case Studies : §  Examples of successful service innova9on to discuss and explore

3.   Business Impact: §  Discussion of which examples have greatest resonance and impact

4.   Tools to Rethink Service Innova2on: §  Four approaches for iden9fy game-‐changing service concepts


These four phases of learning are used during the day to build up knowledge, insight and applica9on

Morning A=ernoon

S9mulate Priori9ze Challenge Focus and Next Steps

Clear Outputs Informed Inputs

External S9mulus

Reflect & Review

1: Context

2: Case Studies

3: Business Impact

4: Tools


NEXT GENERATION SERVICE INNOVATION: THE CONTEXT FOR SERVICE INNOVATION


The first session sets the scene for service innova9on, its scope, its development and its future poten9al

Recogni9on of Service

Innova9on

•  Inclusion of SI in R&D •  Three Key Areas: •  New service development

•  Improved service processes

•  Innova9on in service firms

Different Dimensions

•  The Service Concept •  The Client Interface •  The Delivery System •  Technology Op9ons •  Service Dominant Logic

Next Genera9on Service

Innova9on

•  Co-‐crea9on • Web 2.0 enabled •  New Business Models •  New Value Shi=s

Core Service Innova9on Focus is on “doing be*er things and doing things be*er”


Service innova9on as a specific focus has now been on the scene in different views for over twenty years

Three types of service innova2on: Ian Miles -‐ Univ. of Manchester (1993)

§  New service development §  New or improved service products – Axel Johne and Chris Storey etc

§  Improved service processes §  New or improved ways of designing or delivering services

§  Innova2on in service firms §  Organisa9onal innova9on -‐ processes and management of innova9on

Key components of service innova2on: TEKES §  Replicable elements §  Benefit to producer and customer §  Changes to customer interface, distribu9on, forms of opera9on etc.


In recent years several others in have sought to classify the key dimensions of service innova9on

Four Dimensions of Service Innova2on: Den Hertog (2007) §  The Service Concept

e.g. new value proposi9on, new retail format §  The Client Interface

e.g. par9cipa9on of customers, changes in roles §  The Delivery System

e.g. linkage between provider and customer, job roles §  Technology Op2ons

e.g. more effec9ve informa9on processing, smart communica9ons Others views to note: Henry Chesbrough, Tony Ulwick.

Service Innova9on Focus is on “doing be*er things and doing things be*er”


Service Dominant Logic is a good way of thinking about the change adopted by a some organisa9ons

Goods Dominant Logic Service Dominant Logic

Focus Goods Services

Experience Tangible Intangible

Resources Operand Operant

Informa9on Asymmetric Symmetric

Dialogue Propaganda Conversa9on

Value Crea9on Value Added Value Proposi9on

Contracts Transac9onal Rela9onal

Incen9ve Profit Maximisa9on Financial Feedback

Leading Examples: Nike, Apple, IBM, Xerox, GE, MasterCard, Cargill, Starbucks Source: Lusch R. F., Vargo S. L. and Malter A.J., Taking a Leadership Role in Global Marke9ng Management, Organiza9onal Dynamics, Vol. 35, No 3, pp. 264-‐278, 2006


Over the past years, the discipline of service design and innova9on has evolved into the mainstream

Different specialist agencies propose their own views of the service design process Source: LiveWork


Varied models also exist for the overall approach to service innova9on development and thinking

Many look at key components: §  Process §  Organisa9on §  Features of Product §  Nature of Product §  Delivery of Product §  Regula9on §  Marke9ng §  Role of Consumer

Big Focus on “Customers in context” Example Source: Engine


The importance of crea9ng, defining and delivering “great customer experiences” has become key

Great Customer Experiences:

§  Strongly reflect the customer’s iden9ty §  Sa9sfy our higher objec9ves §  Leave nothing to chance §  Set and meet expecta9ons §  Are effortless §  Are stress free §  Indulge the senses §  Are socially engaging §  Put the customer in control §  Consider the emo9ons

Source: Watkinson, M., The Ten Principles Behind Great Customer Experiences, FT / Pearson, 2013


We can now clearly see the emergence of a new phase of ‘next genera9on’ service innova9on

•  Developed in closer partnership with others especially including customers

Co-‐crea2on

•  Take advantage of interac9vity, social networks and shi= towards seman9c web

Web 2.0

•  Adopt and adapt new mechanisms for tangible and intangible value crea9on

New Business Models

•  Underpinned by changes in how people and organiza9ons wish to share value

New Value ShiYs

The emerging successes are based on four key themes:


Successful service innova9on only occurs when four key elements are all present, aligned and balanced

Successful Service

Innova2on

Unique Value

Proposi2on

Improved Delivery Approach

Growing Emerging Trend

Enhanced Customer Experience


Each of these elements are sources of differen9a9on that collec9vely bring together the winning formula

Successful Service

Innova2on

Unique Value

Proposi2on

Improved Delivery Approach

Growing Emerging Trend

Enhanced Customer Experience

Unique Value Proposi2on: •  Delivers customers clear value •  Provides a compelling story •  Can be delivered profitably

Improved Delivery Approach: •  Does things beoer •  More efficient than exis9ng •  Highly effec9ve plaqorm

Enhanced Customer Experience: •  Improves customer’s life •  Simple & engaging touch-‐points •  Transparent customer journey

Growing Emerging Trend: •  Taps into evident shi= in market •  Sustainable growing issue •  Global / regional relevance


Ul9mately, successful service innova9on changes expecta9ons of what can be repeatedly delivered

Service Innova9on Focus is on “doing be*er things and doing things be*er”


NEXT GENERATION SERVICE INNOVATION: CASE STUDIES


9 ini9al case studies provide a wide range of different s9mulus around successful service innova9on today

§  Efficiently delivering an ever changing porqolio

§  Reconfiguring a product into a service

§  Mass personalisa9on at scale

§  Using data to get close to customers

§  Redefining expecta9ons of travel

§  Scaling without constraints

§  Delivering a wide and dis9nc9ve porqolio of needs

§  Extending global adver9sing reach

§  Repackaging the concert value proposi9on


8 other case studies highlight some next genera9on service models that are now emerging and growing

§  Maximizing fixed asset u9liza9on

§  Reinven9ng the healthcare business model

§  Providing banking access at the booom of the pyramid

§  Pay as you drive insurance

§  Crowd funding public services

§  Peer-‐to-‐peer finance

§  Co-‐created investment funds

§  Real-‐9me dynamic pricing of 9ckets


Inditex, the worlds best retailer, supports high levels of autonomy, fast decisions and con9nuous change


For Inditex, rapid, con9nuous change of merchandise results in high customer demand and very low waste

4 x Average store visits per year (Innova2on)

Fast Fashion

(Proposi2on)

Global 48hr

Logis2cs (Delivery)

Curated Choice (Trend)

Always Something

New (Experience)


Rolls-‐Royce has reconfigured a high tech product and support rela9onship into a long term service contract


Rolls-‐Royce’s ‘power by the hour’ Total Care service has grown to represent over 70% of group revenues

Redefined Rela2onship (Innova2on)

Pay only for use

(Proposi2on)

24/7 Remote

Monitoring (Delivery)

Access not Ownership

(Trend)

Guaranteed Availability (Experience)


Nike has used Nike ID as a plaqorm for giving customers apparent personalisa9on at scale


Nike ID has become the benchmark for mass customisa9on services around core products

Curated Op2ons (Innova2on)

Configure Your Own (Proposi2on)

Direct to Home (Delivery)

Mass Customis-‐a2on (Trend)

Unique Personal Products (Experience)


Amazon is a massively efficient business delivering customer sa9sfac9on via proprietary technology


Amazon uses its data exper9se to give customers a huge range of credible personal recommenda9ons

Personal Matching (Innova2on)

Everything fast and cheap

(Proposi2on)

Integrated Logis2cs (Delivery)

Real-‐2me Analy2cs (Trend)

Simple and Ubiquitous (Experience)


Under Singapore Airline’s ownership, Virgin Atlan9c has consistently reinvented the flying experience


Virgin Atlan9c’s crea9on of Upper Class and Premium Economy changed the mass accessible experience

Reinvent Status Quo (Innova2on)

Create New

Segments (Proposi2on)

Challenger Posi2oning (Delivery)

Flexible Spaces (Trend)

Radical Seamless Design

(Experience)


Bhar9 Airtel’s extreme outsourcing business model enabled it to scale quickly and it is now the world #3


By partnering on everything but the core customer rela9onship, Airtel has been able to grow quicker

Scaling without Legacy

(Innova2on)

The Latest at Low Cost

(Proposi2on)

Global Partners (Delivery)

Pervasive Mobile (Trend)

Simple and Fast Access

(Experience)


Starwood drives high loyalty by efficiently delivering consistent and memorable guest experiences


Starwood Hotels has created mul9ple leading but separate branded experiences with global resonance

Dis2nc2ve Branded

Experiences (Innova2on)

Mul2-‐brand

Pordolio (Proposi2on)

Consistent Franchise (Delivery)

Global Connec2vity

(Trend)

Memorable Standards (Experience)


Google excels at par9cipa9ve product development that supports incessant adjacent sector disrup9on


Google has been innova9ng across mul9ple sectors while building the world most connected ad agency

Growing Reach and Relevance (Innova2on)

Beeer Informa2on (Proposi2on)

Connected Data

(Delivery)

Credible Sources (Trend)

Beta based Innova2on (Experience)


Live Na9on has aligned around change in its industry and fully repackaged the concert value proposi9on


While the cost to access music has declined, Live Na9on has premiumised the mass live experience

360 Wrap Star Deals (Innova2on)

Access to the Top Acts

(Proposi2on)

Exclusive Partners (Delivery)

Live Experiences

(Trend)

Seamless Integra2on (Experience)


Zipcar brings vehicle affordable access by the hour into the neighbourhood and changes rental models


By shi=ing both pricing and access models, Zipcar is making flexible access more popular than ownership

Replace Urban Car Ownership (Innova2on)

Flexible Access

(Proposi2on)

Availability Guarantee (Delivery)

Access not Ownership

(Trend)

Easy and Local

(Experience)


Narayana Hrundayalaya leads in efficient surgery through integrated process and business innova9on


As a centre of exper9se Naranaya Hrundayalaya is the place to go for doctors and pa9ents globally

Systema2c Factory

(Innova2on)

Best for Less

(Proposi2on)

Op2mised Process (Delivery)

Medical Tourism (Trend)

Fast and Efficient (Experience)


Across Africa M-‐Pesa has proven that money transfer via mobile is viable at the booom of the pyramid


M-‐Pesa is scaling fast as a trusted plaqorm with momentum building to a wider porqolio and reach

Step change for the

Unbanked (Innova2on)

Low Cost Transfer

(Proposi2on)

Agent Networks (Delivery)

PervasiveMobile (Trend)

Simple and

Trusted (Experience)


AA Drivesafe has made pay as you drive insurance accessible through rewarding behaviour change


Improving on previous models AA Drivesafe provides transparent cheaper car insurance for safer drivers

Cheaper insurance for safe drivers

(Innova2on)

Visible Choice

(Proposi2on)

Partner with

Networks (Delivery)

Real Time Tracking (Trend)

Clear Payback (Experience)


Ci9zinvestor is bringing direct local benefit to those wishing to invest in social innova9on and ac9on


By matching tangible needs to investors Ci9zinvestor is efficiently by-‐passing local government ac9vi9es

Transparent Marketplace (Innova2on)

Invest in Local

(Proposi2on)

Collec2ve Ac2on (Delivery)

Crowd-‐funding (Trend)

Social Impact

(Experience)


Zopa is a pioneer in peer-‐to-‐peer banking that shares efficiencies with both savers and those seeking loans


By crea9ng a more efficient and trusted system Zopa and co have the poten9al to disrupt the mainstream

Community Bond Market

(Innova2on)

Beeer Rates

(Proposi2on)

Using Dispersed Scale

(Delivery)

Power of Networks

(Trend)

Simple and

Trusted (Experience)


Mo9f is demys9fying the fund management arena by giving a plaqorm to those with the best ideas


Investors can put their money behind the best concepts that Mo9f makes clear to everyone

Demys2fying Fund

Management (Innova2on)

Access High Performers (Proposi2on)

Credible Investment Engine (Delivery)

ShiY in Trust (Trend)

Informed Inves2ng (Experience)


Qcue’s approach to real-‐9me dynamic pricing of 9ckets is helping improve the market efficiency


In providing transparency on value op9ons, Qcue helps all key event players maximise their revenues

Accurate Ticket Pricing

(Innova2on)

Op2mise Yield

(Proposi2on)

Enabling SoYware (Delivery)

Dynamic Pricing (Trend)

Real-‐2me Insight

(Experience)


Across these ‘next genera9on’ service innova9ons, the four key themes are all evident and significant

•  Developed in closer partnership with others especially including customers

Co-‐crea2on

•  Take advantage of interac9vity, social networks and shi= towards seman9c web

Web 2.0

•  Adopt and adapt new mechanisms for tangible and intangible value crea9on

New Business Models

•  Underpinned by changes in how people and organiza9ons wish to share value

New Value ShiYs


NEXT GENERATION SERVICE INNOVATION: BUSINESS IMPACT


This third session uses the case studies so that you see which have greatest relevance for your business

The aim of this session is four-‐fold:

§  Allow you to consider the case studies more

§  Encourage you to think of what lessons they may have for you

§  Map those which highest poten9al impact and relevance

§  Select and discuss the few key case studies that have greatest insight


First use your case study cards and sort them by their poten9al impact to the market in which you operate

Increasing poten2al impact to your market

Low High


Now thinking more specifically about your business, raise and lower the cards to sort them by relevance

Increasing poten

2al relevan

ce to

you

r business

Low

High


Your matrix should now clearly highlight those case studies from which you think there is most to learn

High Relevance / Low Poten9al

Impact

High Relevance /

High Poten9al Impact

Low Relevance / Low Impact

Low Relevance /

High Poten9al Impact

Example outcome:


NEXT GENERATION SERVICE INNOVATION: TOOLS TO RETHINK SERVICE INNOVATION


This final session pilots four different tools to help iden9fy game-‐changing service concepts

§  Parallel View – What if X, Y or Z were running our business §  Developing scenarios of top case study examples taking control §  Good at highligh9ng different cultural and strategic priori9es

§  Value Innova2on and Blue Ocean Strategy §  Using this well regarded approach to reconfigure value proposi9ons §  Provides a clear approach for refocusing on the customer

§  Lean Thinking §  Taking out what does not add value and reusing freed resources §  Very good at helping firms seeing how they can ‘do things beoer’

§  Destroy Your Own Business §  Approach for rethinking how to create value if free of legacy §  Excellent way of s9mula9ng people around ‘doing beoer things’


Parallel Views help us think about how other brands would deliver a beoer / different service experience

§  Principle based on looking at issue through other’s eyes

§  Can be used for whole new service crea2on or experience innova2on

§  Works well if choosing organisa2ons both in your sector and outside

§  Best if you push the boundaries and go for extremes

§  Focus on revolu2onary changes that other brands could do


Parallel Views – Approach Overview

Select

• Choose two different brands known for innova9on in service experience

Suspend

•  Ignore your exis9ng and legacy ways of service delivery in your market

Change

• Discuss how the other brands could deliver a beoer experience

Detail

•  Spell out the key components of the new service innova9on

Impact

• Discuss which of these could be achieved by your business and how


Value innova9on, is the simultaneous pursuit of differen9a9on and low cost, crea9ng a leap in value

§  This is the cornerstone of ‘blue ocean strategy’ in crea2ng value for both buyers and the company:

§  Value to buyers comes from the offering’s u9lity minus its price

§  Value to the company is generated from the offering’s price minus its cost

§  So, value innova2on is achieved only when the whole system of u9lity, price, and cost is aligned.


One of the earliest successful uses of Value Innova9on thinking was for Formule 1 hotels


Value Innova9on – Approach Overview

§  Iden2fy the key factors on the service delivery for customer and supplier §  Plot and map a couple of current leading offers as curves

§  Break the value-‐cost tradeoff by answering the following ques2ons:

1.  What factors can be eliminated that the industry has taken for granted? 2.  What factors can be reduced well below the industry’s standard? 3.  What factors can be raised well above the industry’s standard? 4.  What factors can be created that the industry has never offered?

§  Redraw the value curve of a new service innova2on that changes the game

§  Discuss the new value proposi2on and how to delivery it effec2vely


Lean Thinking first evolved as a technique used in manufacturing but is now applied to many areas


There are five overriding principles to Lean Thinking that have helped many reinvent their service delivery Iden2fy Customers and Specify Value §  Only a frac9on of total effort in any organisa9on adds value for the end customer §  Need to clearly define Value for a service from the end customer’s perspec9ve §  All the non value ac9vi9es -‐ or waste -‐ can be targeted for removal Iden2fy and Map the Value Stream §  The Value Stream is the end-‐to-‐end ac9vi9es across the firm delivering the service. §  Understand what your customer wants and how you are delivering that to them. Create Flow by Elimina2ng Waste §  When you map the Value Stream you will find less than half of ac9vi9es add value. §  Elimina9ng this waste ensures that your service “flows” beoer to the customer. Respond to Customer Pull §  See the customer demand and then create your process to respond to this. §  Produce only what the customer wants when the customer wants it. Pursue Perfec2on §  Radically reorganising individual process steps to eliminate waste. §  Aim for perfec9on, where every ac9on adds value for the end customer.


Lean Thinking – Approach Overview

Source: Peter Hines, Lean Enterprise Research Centre, Cardiff Business School

Iden9fy Value

Map the Value Stream

Create Flow

Establish Pull

Seek Perfec9on


Destroy Your Own Business was an approach to radical rethinking that grew out of GE in 2000

Back in 2000 GE created the destroy-‐your-‐business exercise §  It forced every company business unit to benchmark compe9tors, develop

a Web-‐based business plan to erode its own customer base and then change its own business opera9ons to respond to the threat.

Since then the approach has evolved into a co-‐crea2on experience §  Working with customers to co-‐define new ways of mee9ng new needs

Core principle is well proven: §  If you are freed from exis9ng prac9ce and assets, how would you use new

approaches available today to take #1 spot in your sector? §  What can your exis9ng business do to take advantage of this by innova9ng

the service proposi9on to customers?

next generation service innovation workshop - singapore - 23 august 2013

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